Woodcraft Closings

[Jfitz]

A local (well, semi-local) WC store is closing its doors. I've found several articles of WC stores closing over the past year or so - no doubt the economy has hit these stores hard as hobbyists cut back on their spending.

I dug a little into WC franchise info, and here's what I found:

5% of gross sales goes to WC (Corporate)

1% of gross sales go to WC "Marketing" fund

5% of gross sales must go to WC-approved local advertising.

Think about that, all of a store's costs - leases/rents, insurance, salaries, training, utilities, cleaning crew, trash disposal, and even the other fees paid to Woodcraft, ALL costs essentially incur an 11% increase (since they are all based on gross sales) just to cover the money needed to pay WC. I suppose that's all well and good if you have the sole presence in your territory, preserving your value and 'brand' - but with the internet, the very same goods are available via wc.com and amazon. In our business, we call that 'channel conflict' and it really PO's our distributors when we undercut them.

Factor in the sales tax advantage and it gets worse - a $100 item at a local store would cost me 106.25: 6.25 goes to the state, $5 goes to WC, $1 goes to WC Marketing, and I need to pay $5 local advertising - for a net of $89. Then I get to pay rent, electricity, heat, salaries, etc. The same $106.25 used online goes to Amazon - no sales tax, no 5% fee, no 1% mkt fee, no local advertising fee. No wonder Amazon and WC websites can offer a 10% discount so often. This is a rampant issue in the retail industrry these days IMO.

I find myself wondering if WC is in some sort of violation of the terms of their franchise agreements by allowing Amazon to sell their products directly to people in a franchisee's "territory". Is Amazon considered a retail store? From a copy of the franchise agreement I found - "...we will not establish or operate or license others to establish or operate a Woodcraft retail store within the Territory granted to You". Directly from the Amazon site, there is a link to "Go to the Woodcraft Store" - which is not wc.com but rather a storefront operated by Amazon.

Thoughts?

[ryandetzel]

I noticed you're in MA, which store is closing?

[Jfitz]

Ryan - the one in Providence is closing. It's actually in East Greenwich, but is often labeled as Providence.

[jimmykx250]

To be honest I looked at the woodcraft thing a while back and the numbers didnt make sence then. Why pay someone to do the franchise thing when you could set your own store up? Woodworking community seems pretty tight so word would travel fast of a new store in the hood. I sometimes walk into the local wc or rockler store and they are usually pretty slow and I think to myself what are these guys getting paid usually 3 to 5 in the store at any one time- that in itself doesnt add up and with amazon around its just nails in the coffin in my opinion. Why bother unless you can provide a UNIQUE experience for the customer.

[Jfitz]

Jimmy - I agree. I think you hit the nail on the head with the word 'unique'.

The whole idea of a franchise is to lock-in the business of a certain territory, and be assured that the value of what you offer (the products, the information, the experience, the *brand*) is unique in that area. Years ago, I would say the WC franchise model made fit that model and made sense - offer items specifically for one specialty (woodworking), with the brand name, products, and expertise behind it; use the local stores for the sales and "corporate" to build the brand. Now - the brand is diluted IMO because you can get WC stuff anywhere; their biggest competitor is the Woodcraft website; and now Amazon sells items you would ordinarily get at the store.

I also looked at the numbers, and I couldnt' see it working as long as so much money (fees) and business (internet) went directory to WC Corporate. I think they are also at a point where their 'best' products are not terribly unique to Woodcraft and could probably be stocked independent of WC.

If I were to consider opening a woodworking specialty store, I see little reason to latch onto a brand like WC and instead would try to build locally by selling the right value products, building the client base, and also growing the interest in woodworking as a hobby (via classes, demos, etc). I think interest in woodworking has suffered since so many kids these days are unable to take wood shop in school.

[CubsFan]

Remember that of that 11%, the store is getting a benefit from 6% of it, it doesn't just disappear. Even if you're a local business, you still have to do some advertising. On top of that, you're also getting advertising on a much larger scale (Woodcraft has tons of ads in all the woodworking magazines, but none of my local stores do).

On top of that I'm guessing that they have one supplier. If you open up one local store, you have to establish relationships with lots of suppliers (General, CMT, etc..).

I've found one other thing that woodworking stores really have an advantage in (versus websites) is immediate availability. Quite often I could get something much cheaper online, but I need it now, or I'm stalled in my project.

[Jfitz]

I agree there is benefit from those costs, but when it is unclear if your 2 main competitors - which also benefit from the exact same brand and exposure - have that same overhead, I can only conclude the local store is at a price disadvantage. Interestingly, I just went through the motions of buying a WC item from Amazon, and it looks like they do in fact collect Sales Tax (since Woodcraft has a physical presence in my state).

I also agree that dealing with suppliers would be an added burden, but that flexibility of dealing with and choosing your own suppliers and products, should be part of a specialty shop. Otherwise the value is no better than the BORG or Walmart, against which a small shop cannot compete on just price.

Availability is - and should be - an advantage for a local store, assuming they stock the *right* items. That's the trick, I would imagine.

[jimmykx250]

John-

I agree 100%. The market for the WC stores was stronger in the past not so much now. Sure they will always have the customer that walks in and needs something right now but that doesnt mean the other unique store wouldent either. Bottom line in todays market place ANY bick and mortar store is going to have difficultys surviving. There just isnt enough margin on most items anymore. Look at machinery what is the mark up there?

[HoboMonk]

My experiences with local Woodcraft stores (Cincinnati, Ohio and Lexington, Kentucky) are 180 degrees different than the main theme of this topic. Our WC's have excellent training facilities, great local teachers, manufacturers demos, high-profile visiting instructors, the best artisan wood inventory in Greater Cincinnati (truck load amounts!), lots of sales and special offers, they stock finishing products that no one else in town carries, have an extremely knowledgeable staff, and they host frequent woodworking community events.

I'm a professional wood artist and I appreciate the value-added products and services that my local Woodcraft stores offer.

Blessings,

Bro. Tenzin

[Jfitz]

Bro. Tenzin - I believe that many WC stores offer all that you mention. I guess I'm questioning how much of a 'squeeze' will be put on these stores as more people go to the internet not only for shopping, but also for expertise/hints/etc. There will always be a need for local expertise.....but will it be enough to pay the bills? I hope so....but only time will tell.

[jimmykx250]

Im not knocking woodcraft- the numbers just dont seem to make sence enough for me to want to open a store. In my experience here in northern illinois is that if you are after exotic woods to work sure you can get them at woodcraft BUT your paying FULL price. As for the rest of the store yes all quality products and a helpfull staff but are they profitable? Can you buy their products cheaper elsewhere? I dont see them as a long term player thats all.

[HoboMonk]

Our local Woodcraft carries a wide selection of woods, not just exotics. I have bought short pieces of oak and maple for my business at sell-off prices of $1/bf and less. Walnut and cherry are comfortably priced.

They seem to have continuous sales and great pricing on many things. I have never paid srp (full price) on my WC purchases - with frugal shopping. Commodity products are always up for grabs, wrt pricing and sources.

They carry big ticket, high quality woodworking machines that aren't sold anywhere else in town, and often with manufacturer supported price incentives. Nothing beats a touch-me-feel-me experience when spending thousands of dollars on a machine. Often they have used or buy-out deals on big ticket items.

They carry the best array of artisan quality wood finishing products in our area. Does WalMart or the Big Box stores carry heat treated walnut oil, Waterlox prodcuts, or TransTint dyes? Besides, the knowledgeable staff at my local WC can guide me in my purchases.

Note: They have their own magazine and it's a good one. They sponsor several of the remaining woodworking tv programs. The owners of our local Woodcraft stores are telling me that it was a good business decision for them. Their classes are excellent. You'll not only find expert local instructors, but some of the better known wood gurus. I've met Tommy MacDonald, Scott Phillips, Rob Cosman, Glen Huey and many others at the local WC. Of course the offices and staff for Popular Woodworking magazine is in the neighborhood.

Woodworking is a tactile pursuit and is skill-driven. I like going where my needs are understood and expertly supported.

[jHop]

I know I'm late to this discussion. I don't know the numbers, but I do appreciate that I got onto the mailing list at my local WC. Every so often, I get an email about some new purchase of lumber that they have made, usually offered at a lower rate than I can find anywhere else without a three hour drive.

Around here, there's one Woodcraft on the East side, and the Rockler franchise on the Southwest side. And not much else. Sure, there's big box stores, and the odd construction lumber yard, but not much like Woodcraft. I've gone to two locations that sell tools, and one I've gone back to several times, but they don't do classes, and neither really specializes in wood working. (the one I've gone back to does have people who do woodworking, but they are more machinists and specialize in repairing tools and do wood working as a side thing.)

My father got out of real estate for the same reason most Woodcraft franchises close: too many people trying to get a slice of the check, and sometimes that check is not large enough. It's a shame to see these stores closing, but I can't fault the guys for making that decision. it's a tough economy, and it prompts some tough choices. And nowadays, many small guys are getting their start by using the internet to save some money and get started. Sooner or later, though, they all start looking for that local hangout, where the "old timers" go to purchase stuff.

The point of my ramble is that the Woodcrafts will come back. Maybe not soon, but they will come back. We just need to be patient and ride these rough waves until things turn around. And be nice to those newcomers to the craft, mentoring them along. (And telling them where the good lumber is hidden.)